Voluntary Defined Contribution Pension for the Self-Employed
Frivillig innskuddspensjon
Coverage
Voluntary insurance
- Self-employed individuals (business owners).
- This type of saving involves the establishment of a pension scheme tied to a business (if a self-employed individual has employees, this can be the same as the mandatory private sector occupational pension schemes (OTP) established for the employees, but for the self-employed the participation in the OTP pension scheme remains voluntary).
Financing
General finances
- Fully funded personal pension plans based on personal contribution payments and capital revenues.
Contribution payments
- Individuals provide contribution payments and decide upon its amount individually.
- Contributions can be up to a maximum of 7% of income between 1 and 12 G1.
State support
- Contributions are tax-deductible. (The scheme is most beneficial for individuals with an income above 7.1 G and thus most suitable to the high-earning self-employed.)
Administration
- Pension plan providers manage pension funds and pay benefits directly to the person.
- Norwegian institutions and institutions in the EEA are eligible.
Qualifying Conditions
- The payment of pension can start no earlier than at 62 years, and the pension must be paid until at least 77 years of age.
Benefits
Pension payments
- Accumulated capital through contribution payments and investment yields, minus administration costs/fees of pension plan provider.
- Defined contribution (DC) plan.
Taxation and social security contributions on pension payments
- Pensioners pay reduced social security contributions (5.1%, compared to 8.2% for employees).
- All pension income is subject to taxation; a tax reduction of up to NOK 30,000 is granted to pensioners.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Voluntary insurance
- Self-employed individuals (business owners).
- This type of saving involves the establishment of a pension scheme tied to a business (if a self-employed individual has employees, this can be the same as the mandatory private sector occupational pension schemes (OTP) established for the employees, but for the self-employed the participation in the OTP pension scheme remains voluntary).
General finances
- Fully funded personal pension plans based on personal contribution payments and capital revenues.
Contribution payments
- Individuals provide contribution payments and decide upon its amount individually.
- Contributions can be up to a maximum of 7% of income between 1 and 12 G1.
State support
- Contributions are tax-deductible. (The scheme is most beneficial for individuals with an income above 7.1 G and thus most suitable to the high-earning self-employed.)
- Pension plan providers manage pension funds and pay benefits directly to the person.
- Norwegian institutions and institutions in the EEA are eligible.
- The payment of pension can start no earlier than at 62 years, and the pension must be paid until at least 77 years of age.
Pension payments
- Accumulated capital through contribution payments and investment yields, minus administration costs/fees of pension plan provider.
- Defined contribution (DC) plan.
Taxation and social security contributions on pension payments
- Pensioners pay reduced social security contributions (5.1%, compared to 8.2% for employees).
- All pension income is subject to taxation; a tax reduction of up to NOK 30,000 is granted to pensioners.
1 The wage-indexed basic amount ‘G’ (grunnbeløpet) plays a central role in calculating contributions and benefits under the pension system. 1 G amounts to around 1/6 of average annual full-time labour income (NOK 99,858 as of 1 May 2019).
Legal Basis: Act on Defined Contribution Pensions in Work Relations (Lov om innskuddspensjon i arbeidsforhold (innskuddspensjonsloven)).